Credit Scores and Car Insurance Rates
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UPDATED: Mar 13, 2020
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You’ve probably heard recently that credit scoring comes into play when setting your car insurance premium.
Well, it doesn’t just come into play – it’s actually a major driver of car insurance rates, according to a new study from CarInsurance.com.
The company noted that drivers with credit scores above 750 save an average of $783 annually on car insurance.
Fortunately, about 40 percent of consumers have credit scores above this range, so they can benefit from insurance companies using insurance scores.
In fact, these drivers can save nearly $23,000 on car insurance throughout their adult lives.
But what about the rest of the population?
That’s a savings of 40 percent, simply for doing the right thing every month – paying bills on time and keeping balances low.
And it sure beats any car insurance discount you may be eligible for.
For drivers 16 to 24, credit scores don’t make as much of an impact unless you don’t have one.
If your credit file hasn’t been created yet, due to a lack of credit information, you could pay more than $4,000 a year for car insurance!
All the more reason for parents to add their children as authorized users on credit cards (but not give them one!) to help them build credit.
So if you’re looking to save money on car insurance, be sure to keep your credit score in good health!
Average premium for drivers age 16 to 24 — $3,152
– Credit score above 750 — $2,515
– Credit score of 650 to 749 — $2,387
– Credit score of 500 to 649 — $2,692
– No credit file — $4,191
Average premium for drivers age 25 to 34 — $1,938
– Credit score above 750 — $1,155
– Credit score of 650 to 749 — $1,658
– Credit score of 500 to 649 — $2,023
– No credit file — $2,182